MOSCOW – As Russias economy slowly recovers from the post-2014 recession, its engine oil market is also showing signs of progress, driven by factors such as rebounding demand for passenger car lubricants and increased sales of synthetics, a market study by GfK consultancy found.
The countrys macroeconomic figures show its inflation rate declined to 4.2 percent in 2017, compared to 5.4 percent in 2016, while gross domestic product growth reached 1.7 percent in 2017, compared to a 0.6 GDP percent decline in 2016, according to GfK Russia.
The real income of the population has relatively strengthened, and the unemployment rate has fallen to 4.9 percent in 2017, Ayuka Mandzhieva, consultant for the automotive sector at GfK, told RPIs International Lubricants conference held here recently. Consumer expectations in the beginning of 2017 were positive, the growth in new car sales has risen by 9.6 percent, and the market for spare parts and lubricants is bouncing back.
The GfK study, which uses data from the Russian state statistical service, encompasses 36 Russian cities and over 500,000 people and surveyed channels of distribution such as tire service shops, passenger car and heavy-duty auto part stores and retail centers.
The consultancy found that the countrys engine oil market started to recover in the first half of 2017, and that lube demand grew steadily during that time.
In the first half of 2017 engine oil demand grew by 1.5 percent compared to the year before, bearing in mind that the market slumped 9 percent in 2015 compared to the year before, Mandzhieva said,
She added that GfK expects that Russias engine oil demand could reach the pre-2014 level if demand achieves 2 percent annual growth by 2020.
Spare parts such as car tires, car bulbs, wiper blades and spark plugs experienced improved sales in the first half of 2017, according to GfK. Engine oil sale volumes rose by 1.5 percent, while gear and transmission oil sales volume [increased] by 4.9 percent. However, this was not the case for commercial vehicle engine oil, Mandzhieva said.
Geographically, all of Russias federal districts, except Siberia, have seen growth in lubricant demand in the first half of 2017. For example, the Central and Northwest federal districts – the largest, population-wise – have seen growth of 3.2 and 2.5 percent respectively, while the Volga federal district has seen 5.8 percent growth, Mandzhieva said.
The GfK study found that the 2017 recovery was led by the rise in sales of synthetic products. In fact, demand for fully synthetic oils have seen growth since 2012. Only once – in the peak of the crisis in 2015 – [synthetic] demand slipped by 12 percent, but in the following years we witnessed a recovery, Mandzhieva said, adding that in the first half of 2017 demand for synthetic oils grew by 5.8 percent.
Demand for semi-synthetic oils, however, decreased by 1.2 percent in the first half of 2017, while mineral oil demand slipped by 9 percent, compared to the same time a year before, according to the study.
In terms of motor oil viscosities, the most sought after were S.A.E. 5W-30, 0W-30 and 5W-40 grades. In the first half of 2017 demand for these grades grew 5 percent, 10 percent and 5 percent, respectively. Other grades with healthy growth were 0W-20 and 5W-20.
This trend is driven by the latest recommendation of car makers, Mandzhieva said.
GfK also found that in 2017 motor oil prices in Russia fell by 5 percent on average. We observed this trend for the first time in the last few years, and it is related to the marketers aim to lower the prices by being competitive and selling more volumes. Also it is related to lower demand for the 10W-40 products supplied primarily by the domestic marketers.